Arizona Opioid maker target of state AG probe

Attorney General Mark Brnovich is looking into the marketing practices of an Arizona firm that manufactures opioids.

Documents filed by Insys Therapeutics with the Securities and Exchange Commission disclose that the Chandler-based company has received a “civil investigative demand” from officials both here and in several other states. And the filing also says the company understands that “numerous physicians” within each of the states also have been served with subpoenas about their interactions with Insys.

The company says the demands want to know about its sales and marketing practices related to Subsys, a form of the opiate fentanyl which is applied by spraying it under the tongue. It is currently the company’s only approved product.

Mia Garcia, spokeswoman for Brnovich, declined to comment.

“As a general rule, our office does not announce potential ongoing investigations prior to the filing of a consumer fraud lawsuit or settlement agreement,” she said.

But on Thursday Texas Attorney General Ken Paxton announced his office is working “with a bipartisan coalition of a majority of state attorneys general to evaluate whether manufacturers have engaged in unlawful practices in the marketing and sale of opioids.” Garcia would not say whether Arizona is part of that effort.

It also comes as Reuters reports that federal prosecutors in Massachusetts told a judge that a former Insys manager has agreed to plead guilty in connection with charges that the firm was involved in defrauding insurers to pay for the expensive drug. A total of six former company executives and managers, including former CEO Michael Babich, are accused to participating in a scheme to bribe doctors to prescribe the drug.

And the disclosure follows an executive order issued earlier this week by Gov. Doug Ducey giving state health officials broad powers to investigate cases of opioid overdoses. That comes as state officials cited statistics that all manufacturers sold 431 million doses of the drug in Arizona last year, a state with just 6.9 million residents.

There was no immediate response from company officials to the disclosure in the SEC filings.

But in a press release last month about the charges against the former officials, new CEO Saeed Motahari said Insys “has taken appropriate steps to strive to ensure that ethical standards of conduct and patient interests are at the heart of all business decisions.”

The central question in all existing inquiries on opioid abuse is whether the drug is being overprescribed – and whether any of the blame rests with the manufacturers.

That theory was laid out in a lawsuit filed last month against several companies – not including Insys – by Ohio Attorney General Mike DeWine.

“These drug manufacturers led prescribers to believe that opioids were not addictive, that addiction was an easy thing to overcome, or that addiction could actually be treated by taking even more opioids,” he said in a prepared statement. “They knew they were wrong, but they did it anyway.”

There is ample precedent if Arizona decides to go after Insys.

The company reports it entered into an “assurance of voluntary compliance” with the state of Oregon which “requires us to maintain certain control and processes around our promotional and sales activity related to Sybsys in Oregon.” While Insys reports it did not admit any violation of law or regulation, it did agree pay about $1.1 million.

Insys also reports it paid $2.9 million to New Hampshire and a $500,000 contribution to a charity to be used to prevent or remediate problems relating to abuse, misuse or “misprescribing” of opioid drugs.

The company reports it also is in discussions with the attorney general of Illinois after that state filed suit and anticipates a “probable loss” of $500,000 in connection with an investigation in Massachusetts.

Insys got attention during the 2016 election when it was disclosed the company gave $500,000 to the campaign to defeat Proposition 205 which would have legalized the recreational use of marijuana.

J.P. Holyoak, manager of the unsuccessful legalization campaign, charged that the company did not want to make marijuana more widely available so it could “push their far more addictive, far more harmful and far more dangerous opioid drugs.”

In its own prepared statement at the time, Insys said it opposed the initiative “because it fails to protect the safety of Arizona’s citizens, and particularly its children.” And the company noted that the U.S. Food and Drug Administration has not approved marijuana for any medical use.

“We believe that all available medicines should meet the clinical standards set by the FDA,” the statement said.